Equity Overhang Weighs on Constellation Energy (CEG) Despite Solid Core Fundamentals

Equity Overhang Weighs on Constellation Energy (CEG) Despite Solid Core Fundamentals

Fri, September 18, 2026 at 3:50 PM GMT+3 3 min read

• CEG -3.08%

Reaves W H & Co Inc's second-quarter 2026 investor letter reports a 10.55% increase for its "Reaves Long Term Value Wrap Strategy," outperforming the MSCI USA Infrastructure Index's 6.31% decline. The letter can be downloaded here. Cash distributions grew 6.7% in the quarter compared to Q2 2025. Despite geopolitical uncertainty, investor sentiment remained strong. AI expansion benefits companies in construction, connectivity, and infrastructure, especially in utility, communication, engineering, electrical, and power sectors. The strategy's performance benefited from investments across the AI infrastructure ecosystem and support for physical infrastructure supporting AI at scale. Although risks persist, the long-term investment case for many companies remains strong, positioning the strategy for durable growth, increasing dividends, and attractive long-term returns. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026.

In its second-quarter 2026 investor letter, Reaves Long Term Value Wrap Strategy highlighted Constellation Energy Corporation (NASDAQ:CEG). Constellation Energy Corporation (NASDAQ:CEG), a US-based energy company, detracted from performance this quarter. On September 17, 2026, Constellation Energy Corporation (NASDAQ:CEG) closed at $262.80 per share. Over the past month, Constellation Energy Corporation (NASDAQ:CEG) declined 3.69%, but its shares are down 20.58% over the past year. Constellation Energy Corporation (NASDAQ:CEG) has a market capitalization of $93.11 billion, and its stock has traded within a 52-week range of $228.63 to $412.70.

Reaves Long Term Value Wrap Strategy stated the following regarding Constellation Energy Corporation (NASDAQ:CEG) in its Q2 2026 investor letter:

"Constellation Energy Corporation (NASDAQ:CEG): Constellation Energy underperformed during the quarter despite benefiting from the same favorable dynamics that drove Talen's outperformance. The underperformance was largely attributed to an equity overhang rather than a deterioration in fundamentals, as shares issued as consideration for the Calpine acquisition began to reach the market during the quarter. In our view, the selling pressure represents a transfer of shares from a motivated seller to long term holders, a condition that should resolve with time and does not reflect a change in the underlying value of the business."

Constellation Energy Corporation (NASDAQ:CEG) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 73 hedge fund portfolios held Constellation Energy Corporation (NASDAQ:CEG) at the end of the second quarter, down from 79 in the previous quarter. While we acknowledge the potential of Constellation Energy Corporation (NASDAQ:CEG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we discussed Constellation Energy Corporation (NASDAQ:CEG) and noted that the company gained 5% in August despite weakness in the utility sector. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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This article is originally published at Insider Monkey.